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Currency Wars: A Race to the Bottom

“Printing dollars at home means higher inflation in China, higher food prices in Egypt and stock bubbles in Brazil. Printing money means that U.S. debt is devalued so foreign creditors get paid back in cheaper dollars. The devaluation means higher unemployment in developing economies as their exports become more expensive for Americans. The resulting inflation also means higher prices for inputs needed in developing economies like copper, corn, oil and wheat. Foreign countries have begun to fight back against U.S.-caused inflation through subsidies, tariffs and capital controls; the currency war is expanding fast.” – Jim Rickards, Currency Wars

Many consider deliberate currency devaluation to be a tool that can help jump start a nation’s economy. The aim of such a practice is to increase exports while encouraging domestic purchases by making goods outside of the country relatively more expensive.

However, like any good prisoner’s dilemma, this might be the case if only one country acted in isolation. The reality is that many major countries engage in the same policy, and the end result – as the infographic details – is a race to the bottom.

So far the “winner” in the race is Japan.
The BoJ has been rolling with the Abenomics plan for almost two years now and the results are in…

The BoJ’s balance sheet has since exploded in size and they also have the highest public sector debt in the world.

Anyone who is working and living overseas will definitely require an FX facility to transfer currencies between countries for international payments, investments etc.

Be proactive: Take the opportunity to save a lot of money with an on-line FX account for individuals and business FX accounts.

Once you have opened an FX account you, will be far better positioned to take advantage of currency & additional opportunities in the future.

Expatriates are in constant need of FX facilities for:

Transferring lump sums to buy property in a different currency

moving money on/off of the deVere platform

or making regular payments abroad i.e. for mortgage payments.

Hedging currency risk and exchange rates

As part of the an investment portfolio with deVere, we can now make sure that all your financial requirements, including foreign exchange, are met under one roof, via our new bespoke in-house currency service: deVere Foreign Exchange.

Disclaimer

The viewpoints and opinions expressed do not take into account any particular individual's investment objectives, financial situation, political agendas or religious beliefs. My views shared are my own which are derived from my personal experiences and influences and I am free to change them at any time, or realign to accommodate any new conditions and information available. I cannot guarantee the information to be free of mistakes and incorrect interpretations. Any financial topics must not be taken as advice and past performance is not indicative of future results. The information, including commentary, investment ideas, legal, tax and other specialised subjects, should not be relied upon as a substitute for independent professional consultation, which should always be explored before making any financial or legal decisions.